Factors1)Glass segment- Sales at the automotive glass division increased year-on-year, as business remained strong thanks to incentive programs introduced in many countries. In 2010, sales at the automotive glass division accounted for approximately 43 percent of the company's overall glass sales.

Business strategy

Based on the mid-term business plan called "Grow Beyond-2012", the Company aims to enhance profitability of its existing business, while building a sustainable growth structure.

1. Enhancing profitability of its existing business

- The Automotive Glass Division is working on accelerating development and proposal of new products that offer enhanced energy saving feature and comfort levels. It also aims to advance its production technique and propose optimum products that best meet the requirements of respective markets to its customers.

2. Building a sustainable growth structure - The automotive glass division is focusing on developing high-performance products such as heat shield glass and lightweight glass for environmentally friendly vehicles, as well as reinforced, UV cut glass for front door windows that can block 99 percent of ultraviolet rays. -The automotive glass division is looking to tap into the new markets such as Brazil, while improving its presence in Russia, China, Thailand, Indonesia, and India.

R&D

R&D Expenditure

(in million JPY)

FY2010

FY2009

FY2008

Overall

39,399

44,958

37,700

Glass business

8,174

9,611

9,160

R&D expenditures at the Glass Division as a % of overall R&D expenses

20.7

21.4

24.3

- The Group plans to spend approximately 50,000 million yen in R&D activities in 2011.

R&D Structure

- The automotive glass division conducts research and development activities in three regions: Europe (Jumet and Fleurus, Belgium); Japan (Sagami, Aichi, Yokohama); and the U.S.A. (Detroit, Michigan).

R&D Activities

Glass business-The Glass Division is working on developing new products and technology in the area of sheet glass and automotive glass. It is also conducting research to radically improve operations efficiencies of sheet glass production lines, and it is designing various types of glass through computer simulation.-The Company started developing technology to produce glass for photovoltaic power generation, conductive layer, and low reflecting coating. -Development focus is also set on technology to reduce carbon dioxide gas emissions in the glass production process and to engineer innovative technique to produce glass.

Product development

Membrane Electrode Assemblies (MEAs)-The Company will accelerate development of its membrane electrode assembly (MEA), a key component of a fuel cell system, for 2015, which automakers in various countries target as the first year to introduce their fuel cell vehicles (FCVs) to the public. It aims to improve the property of the MEA under high temperature and low humidity conditions in order to increase the durability, which is expected to simplify the fuel-cell system. Asahi Glass thus plans, in terms of materials, to contribute to cost reduction of fuel cell vehicles, which is inevitable for sale in the market. (From an article in the Nikkan Jidosha Shimbun on January 28, 2010)

Plastic windows -The Company is planning to start mass production of automotive plastic windows around 2014. It is targeting electric vehicles, which require a high level of expertise in weight-saving and other technologies. The company is projecting that by 2015 electric vehicles will make up more than 20 percent of overall demand for new vehicles worldwide, which is expected to reach 80 million units. In order to meet growing demand for windows used in these cars, the company is set to accelerate its development activities focused on electric vehicle application, aiming to establish a structure to mass produce these products by 2014 at the latest. The Company already began making proposals to automakers, while looking to expand use of its plastic windows to plug-in hybrids and hybrid vehicles, as well, in the future. (From an article in the Nikkan Jidosha Shimbun on February 24, 2010)

Glass-ceramics substrate -The Company announced that it has developed a new glass-ceramics substrate for high-power LED lighting such as automotive headlights. The company says the product will be available in July. Compared with conventional alumina substrates, the glass-ceramics substrate offers about a 20 to 30 percent improvement in brightness. It also achieves efficient heat dissipation, high durability, and excellent moldability. The company has already started production of the substrates at its new plant in Taiwan, planning to enter into mass production in July with a monthly volume of 20 million units. It will increase production in steps, aiming to generate more than 20 billion yen through sales of the new product by 2020. The Company targets to capture share of over 20 percent in the high-output LED lighting industry, which is expected to grow to a 100-billion-yen market by the same year. (From an article in the Nikkan Jidosha Shimbun on June. 17, 2010)

Investment Activities

Capital Expenditure

(in million JPY)

FY2010

FY2009

FY2008

Overall

117,400

124,900

252,147

Glass business

34,600

45,900

102,957

Capital investment at the Glass Division as a % of overall capital expenditures

29.4%

36.7%

40.9%

- The Group is planning to invest approximately 200,000 million yen in plants and equipment in 2011.

-AGC Glass Europe announced that it will relocate its headquarters from Brussels, Belgium to Louvain-la-Neuve in the suburbs of Brussels. The new headquarters will be built with an investment of around 29 million euros to house all the group's administrative departments, which are at the moment scattered around the country. The Louvain-la-Neuve facility will be ready to welcome its first occupants in the first half of 2013. (From a press release on May 27, 2010)